Global Corporate VC Trends in 2020

Mayer Brown Free Writings + Perspectives

Mayer Brown Free Writings + Perspectives

[author: Carlos Juarez]

CB Insights summarized 2020 corporate venture capital (“CVC”) financing trends in 2020 in its recent report. Globally, CVC-led deals raised over $73.1 billion in 2020 in 3,359 transactions. While global deal levels declined by 1.7%, CVC-backed funding rose by 24% year-over-year. CVC-backed funding increased by 24% year-over-year in the United States. The number of US CVC-backed deals declined to 1,211 in 2020 from 1,238 in 2019. The largest CVC-backed deal in 2020 was a $1 billion private equity investment in a China-based semiconductor company.

979 CVCs were active investors in 2020 compared to 984 in 2019. CVC investments represented 24% of all venture capital deal activity in 2020. Approximately 33% of CVC-backed deals did not include a traditional VC co-investor in 2020, compared to 38% in 2019. As companies delay going public, there has been an increase in CVCs investing in later stage deals. Globally, seed-stage deals accounted for 24% of CVC investments, down 10% year-over-year. The average CVC-backed deal size increased to $28.6 million in 2020, $7.8 million larger than the average venture capital deal (without CVC participation). There were 182 CVC-backed mega-rounds in 2020, 109 of which were CVC-backed mega rounds for US-based companies.

Source: The 2020 Global CVC Report, CB Insights

The report highlights certain sectors in which CVC investors were particularly active globally, including artificial intelligence (“AI”), cybersecurity and digital health. AI companies raised $11.2 billion in CVC-backed deals in 2020, 2% lower than 2019. Thirty AI companies completed mega rounds in 2020. Cybersecurity companies raised a record high of $3.8 billion in CVC-backed funding, which included 12 mega rounds. CVC-backed funding to digital health companies grew by 68% year-over-year to $8.8 billion across 310 transactions in 2020, of these 27 were mega rounds. As a result of increased reliance on technology during the pandemic, tech-enabled sectors have raised large amounts of capital allowing for the development of new products and technologies helping the world adapt to remote working and interaction.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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